The feasibility of adopting inflation targeting in Malawi: an empirical analysis

Kisu Simwaka

Macroeconomics from University Library of Munich, Germany

Abstract: This study attempts to examine the minimum requirements for adopting an inflation targeting framework in Malawi. First, we examined four pre- requisites of an inflation targeting framework: a fairy long track record of low and stable inflation; a degree of independence; having a sole target; and the existence of a predictable and stable relationships between monetary policy and inflation outcomes. The findings indicate that while the requirement of having a sole target has been satisfied, there are still problems associated with the Reserve Bank of Malawi’s independence and the existence of stable and predictable relationship between monetary policy instruments and inflation in Malawi. Therefore, Malawi is yet to reach a stage where a fully-fledged inflation targeting framework could be incorporated into its overall strategy. Keywords: Inflation targeting; central bank independence; vector autoregression Authors’ E-Mail Address: ksimwaka@rbm.malawi.net

Keywords: Inflation targeting; central bank independence; vector autoregression (search for similar items in EconPapers)
JEL-codes: E (search for similar items in EconPapers)
Pages: 50 pages
Date: 2004-07-16
New Economics Papers: this item is included in nep-mon
Note: Type of Document - txt; pages: 50
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